Lending money to family

[CatMakesFive]

Would you lend money to a family member in these circumstances?

I’ve been asked by my cousin to lend her £2.5k for rent arrears. Her landlord has tried to work with her by setting up a payment plan apparently but it’s not worked out and they are now ready to start the eviction process unless she clears the debt. It sounds like it’s been dragging on for almost a year with her paying some, then not, but she’s being quite vague about the timings.

She works full time, has children but gets no financial help from their dad. I don’t know where she would live if she’s evicted. What would happen?

I can easily afford it but I don’t think I’ll get it back, at least not all of it. She says she could pay me £200 per month back but based on what’s happened with non payment to her landlord, I doubt that. I could afford to write it off if she doesn’t pay so that’s not the problem. I wish she hadn’t asked. I feel selfish as it’s not an amount that would be a problem to me but I’ve always had the mindset of not lending money to anyone as it causes issues and a big part of me feels she needs to sort this out herself.

Would you lend her the money?

YABU - Yes

YANBU - No

If yoy give money, pay the LL directly. However if she can’t stick to a payment plan she isn’t going to pay you back

Exactly this!

If she can pay you back on top of her monthly rent then there's no reason she can't pay the landlord back.
If she's planning on continuing to not pay her rent and only pay you the £200 each month then in a year she will be in the same place (if she isn't evicted by then)

I would want to see a full financial disclosure showing how it would help and what her situation is going to be going forwards.
If you think she can genuinely use the money to pay off the arrears and that she will then be sensible enough with her money and afford her rent then that's one thing, but there's no point in just throwing it down the drain for her to end up in the same position again

It's a lot of money, but it's more than that. She's not able to budget or the cost of living is just too high for her which a lot of people are facing.
Is there any way she can get herself on a social housing list? The rent should be considerably cheaper than market value.

If you want to help, I wouldn't lend the money, I would gift it. (I don't lend anymore, I just give if I want). It stops ill feeling. But I think you're putting off the inevitable mess she will be in again in the not too distant future.

I would lean towards no. It would also depend on her other support network - does she have parents that could house her? Why are you her first option? Why does she need money? Illness/unexpected expense vs holiday/designer clothes/eating out?

Money ruins relationships - so either gift it to her with a “this is a one time thing”, and mean it! Or say no. Don’t loan it and then get resentful when you know she’s not paying it back but buying other things.

A) No, you will not get any of this money back.

B) What steps is she putting in place to ensure this doesn’t happen again, and she’s back in arrears, facing eviction? No point in gifting the money now if this is merely kicking the can down the road for it to happen again.

If you can easily afford it then I'd pay it directly to the landlord. Realistically there is no housing help for tenants who make themselves homeless in this way so there is no safety net for her and her children.

For me it would boil down to would I pay money I could easily part with to ensure those children keep a roof over their heads? So I absolutely would.

I know so many families relying on foodbanks at the moment, the cost of living crisis is horrendous. Meeting every bill just isn't possible for a lot of working families right now, especially a single parent who receives no financial support from the non-resident parent.

It's not unreasonable though as you need to help her by ensuring that she's claiming everything that she's entitled to - CMS, UC including housing element, Council Tax benefit etc. She will also likely be entitled to get social tariffs / reductions for energy, water & Internet etc bills.

Also by taking a look at her budgeting ability it will enable to see whether lending her the money is viable or just delays the inevitable by another month. She should also contact CAB for assistance- both financially and by them advocating for her.

If I could afford it (and we were close), I’d probably gift the money but I’d want to know more about the circumstances. How did the arrears build up…was it a genuine shortage of cash or was it poor money management? And the biggest question would be if you paid it off, how would she prevent it from happening again?

I can’t really vote cos I am on the fence. If you could afford to write it off then I think it’s a good thing to do, but it is a lot of money. You won’t get it back and the worry is that you would then become her fall back to clear her debts. It all depends how close you are to her I suppose

Your friend is correct; it is intrusive, but a professional lender would expect this, and under the circumstances so should you

Also, if you're wary about asking, you'll likely also be unsettled about saying no when she comes back for more, so I'd just say no now and be done with it

It won't solve the problem. All you will be doing is clearing the arrears. She still won't be able to afford the rent going forwards. Has she spoken to Citizen's Advice to see if she is entitled to additional benefits?

And if you give her the money, do it knowing she really can't afford to pay you back.

You say this is going on for about a year but How long has she lived there in total? if she's only lived there a year It's very different than if she'd lived there for 10 years and just had trouble in this last year.

if she hasn't been able to stick to the arrangement with the landlord to pay off the arrears it's highly unlikely she's going to be able to stick to the arrangements with you Particularly as you're not in a position to evict her.

If you did lend it to then I would think you're not going to see that money again and if you do its a bonus. if you do lend it to her I would insist that it's paid directly to the landlord with a receipt because if she's got a couple of ground in a hound or a bank account is very easy to suddenly find other things that she needs and offer him a grand instead of two grand.

you could also perhaps offer him half of what he's asking for and maybe let her re set up another payment plan with him for the remainder. he may be inclined to accept that rather than the possibility of nothing at all.

I would also wonder if having paid off the arrears that she ends up in a similar situation again if the underlying cause isn't addressed.

if you can absolutely afford it without any hardship to yourself Then I probably would lend it to her with the understanding this is a one off. If she gets into any further trouble you at least know you've done what you can And given her the opportunity to avoid eviction. I think also it would depend on my relationship with her you say it's a family member but are you close or has this come as a bit of a bolt out of the blue because you're not close?

You will not get it back.
There will be other requests for money.
Does your cousin have parents she can ask ?
You have zero idea of the state of her finances really.

If she can't afford the rent how is she going to afford the rent as well as paying you back? Don't do it.

It won't help her long term unless she's addressed the reasons for getting into arrears in the first place. How does she plan on paying you back plus keeping up to date with the rent? I would also imagine she has other debt too as it has to be pretty bad situation to not be paying rent. Give it as a gift if you want to but a loan will be a headache and create bad feeling when she can't pay it back. I would also offer to help her with budgeting and plans for cleaning debt, increasing income etc if you have the skills to do this with her.

It would be a hard NO from me. She hasn’t been paying (in full) her most important bill and has risked her children having to go into emergency accommodation. Even if she doesn’t genuinely have enough to cover all outgoings, the rent should always be the no.1
priority.

She could have paid her rent and then approached friends and family for some temporary support with groceries etc while she works out how to address her budget deficit. Instead she took a risk with the landlord and sounds like she has been messing the landlord around with promises that haven’t been kept.

She’s now moved on to asking for loans for friends/family and using ‘my children will be homeless’ to tug at the heartstrings. Remember it’s her responsibly to ensure her children aren’t in that situation, not yours.

I would specifically say no because the landlord has obviously run out of patience, and as you would not be in a contract with her, she’s very likely to not bother paying you back…and I know you can afford to write it off..but it’s the principle of it. She KNOWS she has a problem with repayment, yet it asking for a loan and promising something she KNOWS she isn’t likely to do. She may just completely take the piss and not make any effort at all to pay any money back.

There’s also the issue of why she got into arrears to begin with?…by paying it off..are you just delaying the issue, because there’s no point in you giving her £2.5k just for her to be in debt to the landlord again within 6 months.

I think if you are going to go down the route of loan/gift you should be very clear which you are providing, otherwise she may just take the piss. I also think you need to see her bank statements from the point the arrears started until now, to find out why she’s in debt to begin with. It could be that despite knowing she’s in arrears that she’s still doing things like having streaming subscriptions or buying expensive ‘meal deals’ every lunchtime or paying for her child to have swimming lessons. It may sound petty to go through those small transactions…but if she’s spending on non-essential things like that, while knowing that she’s at risk of eviction…it means that she EXPECTS someone else to bail her out and will likely only take responsibility for herself if no-one does.

Personally, no I wouldn't.

If you decide to, gift it but to the landlord directly.

Im guessing she will be asking you again as she is financially irresponsible. This will put you into further awkward moments as she will not expect to have to pay you back.

Such an awful position she has put you in.

If she ia evicted for non payment of rent the LA will regard her as having made herself intentionally homeless and they may refuse to help. I am thinking that the one bill you pay is the one to keep a roof over your head., if your relative has not paid her LL then the chances of her paying you back are small to non existent as she would see that as a lower priority. Could you arrange to pay the money direct to the LL?

If to do decide to help. In reality you would need to treat it as a gift rather than a loan. Her past history suggests she won’t repay, and insist on paying the landlord directly. That way you know the arrears have been cleared. If she isn’t happy with this arrangement then you know the request isn’t genuine and she wants the money for something else so the answer would be a hard no.

If you are close, and happy to do so, then give her the money.

Otherwise, no.

I have a friend who’s been in this situation and if you choose to part with that money, 100% ask to pay it directly to the landlord.

Friend in question only sorted it when she finally heard a “no” from the person who had been lending, but it got to 6k because she just kept doing it.

As others have said, this will be a gift not a loan.

If it's no skin off your nose, I'd say yes. But make it clear it's a one-off and you're not up for being tapped for money on a regular basis.

Certainly consider it a gift and not a loan - if she can't afford her life already, she can't afford a repayment plan.

Would it instead be an option to help her find a cheaper place? Downsize to a 1 bed or similar?

Have been in a similar situation with a relative of my other half. She had hidden the fact that she was about to be evicted along with her 3 kids. My partner and another family member stepped in and saved the day.
They did not expect a repayment and it was never offered. This person then got a much better job and also got a small inheritance which she was not expecting.
She’s in even more debt than ever before and I don’t think she will get any sympathy this time.
Gift it if you want but understand she will probably return to you again and again.

Give it to her as a gift in your mind, but a loan as far as she's concerned. That way you don't expect it back, but anything you do get'll be a bonus. The thing is, if you hardly see anything in return, it might start to rankle you. It depends on your mindset and your attitude toward money. The only other issue I see is that she may continue asking you in the future. I've seen that happen a lot.